I have chosen to base my assignment on the following two businesses: Sole trader- Errol Anderson Motors and PLC-J-Sainsbury's.
INTRODUCTION
I have chosen to base my assignment on the following two businesses: Sole trader- Errol Anderson Motors and PLC-J-Sainsbury's
I have chosen J-Sainsbury's as my PLC because J-Sainsbury's is a well-known retail company, which sells over 23,000 products on their shelves and many household products. J-Sainsbury's comes under the tertiary sector as they provide a service.
Also I chose to do J-Sainsbury's because I have already done a coursework on J-Sainsbury's in another unit so I have all the information I need.
For Sole Trader I have chosen Errol Anderson motor that provides a car repair service in Harrow.
The reason I have chosen Errol Anderson Motors is because I don't know any Sole traders, so instead my teacher gave me a case study on Errol Anderson Motors from which I got my information. Also Errol Anderson Motors is situated in harrow, which is very close to me so I can go there to see the area.
Main Features of Errol Anderson Motors
The Sole trader is simplest form of business organisation. This type of business is owned by one person- although he or she may employee other people to work in the business.
A Sole Trader is some who decides to own and run his or her business and most probably use personal savings as capital to start up the business.
Setting up a Sole Trader can be the least expensive way of starting up a business because Sole Traders normally start of businesses from small premises such as warehouses and shops which don't cost a lot of capital to start compared to J-Sainsbury's which will need a lot of capital to start as it is a big supermarket.
If the business is successful the Sole Traders reward will be the profit which the Sole Trader can keep all to himself as he is the only one to own the business. But if the Sole Trader makes losses and goes into debt then the Sole Trader may have to pay off the debts will his personal savings, which may even mean in selling his cars, houses and other personal belongings.
There are many advantages and disadvantages of being a sole trader,
Advantages
. Easy to set up.
2. You are your own boss, so there is no one telling you what to do, as you have total control of the whole business.
3. Simplicity- there is no forms to fill in to start trading
4. You get all the profits you have made.
5. You can put your decisions into effect quickly because there is no on else to consult.
6. A Sole Trader can be flexible as to working and opening hours and which days to open.
Disadvantages
. You will be working long hours to meet all the deadlines.
2. You are the only person, who owns the business, so you have "Unlimited Liability"
3. You may only know have limited skills.
4. If you are ill you will and your business is closed the owner will make no money.
5. If the owner gets into debts then he will have to pay them off with his personal savings.
6. Difficult to raise capital to expand the business.
Errol loved working with cars and when he was at school he went to a local garage for his work experience. Mr David Turner who was the owner liked the way Errol worked so he gave him a Saturday job.
At the end of year 11 in 1989 Errol went on to college to do a course on car mechanics.
Mr Turner had to leave the business so Errol decide to buy it because he knew enough information about the business.
Mr Turner decided to sell his business to Errol and also gave him a period of 2 years to pay up the money for the tools and equipment.
Errol started up his business by getting some capital from his family, a small loan and a loan from the prince's trust to pay of to Mr Turner.
"Unlimited Liability" is where the owners of the business are responsible for all the debts the business incurs. So this means if the owner has not got enough money to pay of his debts he or she will have to sell of their personal belongings such as, t.v's, house and car to settle the debts
Main Features of J-Sainsbury's
J-Sainsbury's is a plc. A plc is a company whose shares are traded though the stock exchange. The shares can be bought buy any person who may be interested. As J-Sainsbury's is a plc it is easy to obtain information of the company because they have to publish accounts every year because they have to inform the Companies house and the shareholders. When J-Sainsbury's publish accounts the shareholders know how J-Sainsbury have done in the year and if the results are good then more people will be interested in buying shares in the company.
People who have Sainsbury's shares are known as the owners. But the shareholders do not run the company. Boards of directors are appointed by the shareholders to run the company. The boards of directors have to mange the company. The shareholders have ultimate control of the company, as they are the owners.
J-Sainsbury raises capital from taking out bank loans from banks and other financial institutions. Also they raise capital through the sales of their shares.
The liability of J-Sainsbury's is limited. This means that the owners (shareholders) of the business lose only the money they invested in the company if the company goes bankrupt their personal wealth is not at risk
To start a PLC its capital comes from its sales of its shares through the stock exchange and also from the profits. A Company must have more than £50,000 before it can "go public" and must have a satisfactory financial track record. Also it is very important to have enough people interested in buying sharers for it to have a successful flotation.
Advantages
. By having thousands of people or organisation interested in your shares it makes expansion easier.
2. Public limited can be quite small which needs to have 2 directors and 2 shareholders.
3. Very large plc can operate more cheaply than small companies as they operate on economies of scale. This means that large companies can mass-produce goods for sale and buy in bulk to save more money. E.g. like J-Sainsbury's.
4. If the company is successful, the shares will increase in value and this will increase the overall value of the company. For example J-Sainsbury's shares where 244p on October 22nd 2002 and now the value has increased to 298p. So the value of the overall company has increased too.
Disadvantage
. A plc must be registered as such with a Registrar of Companies and has many external regulations to comply with. This means any problems a company encounters may become news if the press run a story on it.
2. An annual general meeting must be held every year inviting all the shareholders. Any shareholders that do not agree with the way the company is managed may raise an objective or vote against the directors.
3. All accounts must be published every year so the company cannot hide a problem year.
4. Shareholders will expect to receive a dividend. They will want the share value to increase. If the share values decrease then this will make the shareholder want to sell their shares, which will make the companies value go down.
5. If the company goes bankrupt then you will loss all the money you have invested in the company.
J-Sainsbury's is a complicated business ownership because the business is too large to be run as a sole trader as Sainsbury's has 463 stores throughout out the UK it will be impossible for 1 person to run all these stores with a high standard of service. Also it will be impossible for the sole trader to raise that type of capital. Therefore it suits J-Sainsbury to trade as a plc.
Anderson Motors is less complicated then Sainsbury's. I say this because Errol Anderson motors is a Sole Trader and not a limited company and this means no shares are involved and there are fewer documents to go through and fewer laws to control his activities.
Sainsbury's have to produce documents called the
Memorandum of Association and Articles of Association.
The Memorandum sets out the constitution and gives details about the company. The company Act 1985 states that the following details must be included: -
. The name of the company.
2. The name and address of the company's registered office.
3.The objectives of the company, and the scope of its activities.
4.The liability of its members
5. The amount of capital to be raised and the number of shares to be issued.
The Articles of Association, deal with the internal running of the company, these include details such as: -
. The rights of the shareholders depending on the type of share they hold
2. The procedures for appointing directors and the scope of their powers;
3. The length of time directors should serve before re-election.
4. The timing and frequency of company meetings.
5. The arrangements for auditing company accounts.
These documents have to be sent to companies' house when they apply for plc structures.
A plc must also have a document called a Statutory Declaration provided. This is a document, which states that the requirements of all the company acts have been met.
Memorandum of Association and Articles of Association are given to the companies' house. After the companies house have checked the Memorandum of Association and Articles of Association and are satisfied they will issue a certificate of trading then a company and trade as a plc
Task 2
The main activity of Errol Anderson motors
There are two different types of activities in a business a "core" activity and a "peripheral" activity.
A "Core" activity is the main dealing of the business and is the most important activity for the business and usually generates the largest and usually generates the largest amount of income. For example, a car showroom's core activity would be selling cars, and an electrical stores core activity would be selling different types of electrical goods.
A "Peripheral" activity is not needed by a business but if a business does have a peripheral activity this will result in the business getting an increase of profit, for example, a car showroom's core activity is to sell car's but can also provide a peripheral activity of providing a loan with interest, and a electrical stores core activity is to sell different types of electrical goods and can also provide a peripheral activity of providing extended guarantee with the products costing the customer a little extra.
The core activity of Errol Anderson motors is to provide a service to his customers by repairing their cars and other motor vehicles. Errol Anderson motors does not have a peripheral activity as fare as I know. I think the reason he has not got any other activities is because he has not got enough time and Errol Anderson has only limited skills.
Errol Anderson motors has many competitors to try and beat, but there is no competitor that is very close to him, for example there is no other motor repair garage right next to him. Some of Errol Anderson motors competitors are, kwik fit, Euromasters and other garages which provide a
Service of repairing cars. I think some car owners will not go to big garages such as BMW, ROVER and FORD because they all normally more expensive.
Errol Anderson motors main customers are going to be friends, residents, small business and households and other small businesses in the area.
Errol Anderson motors will come under the Tertiary sector because he provides a service. Errol Anderson motors is a motor repair industry.
In recent years, motor repair industries are making more profits; this is because more and more people are buying cars so this will boost the motor repair industry. We can see from graph D that more and more people is being hired to work in the tertiary. Also we can see that tertiary sector is still growing in the number of people employed.
The main activities of J-Sainsbury's
Retailing industry:
Retailing involves ...
This is a preview of the whole essay
Errol Anderson motors will come under the Tertiary sector because he provides a service. Errol Anderson motors is a motor repair industry.
In recent years, motor repair industries are making more profits; this is because more and more people are buying cars so this will boost the motor repair industry. We can see from graph D that more and more people is being hired to work in the tertiary. Also we can see that tertiary sector is still growing in the number of people employed.
The main activities of J-Sainsbury's
Retailing industry:
Retailing involves selling goods directly to the customer. This selling can take place in:
Shops
Supermarkets
Shopping centres
Markets
Mail order
On-line shopping (new development)
Out-of-town shopping centres (lakeside)
On the whole, the Retailing industry is growing. Consumer spending has risen steadily in recent years. The number of retail outlets and the number of people employed in this industry has continued to grow.
997
319,000 Retail outlets
2.5 million people employed
£200,000 million value sales
This is a very competitive industry. All these businesses have to keep changing and developing new ideas and products to keep ahead of the competition. They compete with each other in the following ways:
Prices/Discounts/Special offers
Quality and range of products
Opening hours (24 hour opening)
Location
Services
J -Sainsbury's core activity is to offers over 23,000 products of food and groceries 40% of these products are Sainsbury's own brand. A wide range of quality food and grocery products are sold in the supermarkets and many stores offer bread baked on the premises, delicatessen, coffee shops, meat and fish counters, pharmacies, restaurants and petrol stations.
Sainsbury's Bank continues to lead the field in the research and delivery of new products to meet the needs of their customers.
J-Sainsbury has many peripheral activities such as financial services. E.g.:
Instant Access Savings Account, Direct Saver Account, Personal Loans, Sainsbury's Bank Drive, VISA credit card, Home Mover Mortgage, First Time Buyer Mortgage, Buy-to-Let Mortgage, Remortgage, Home and Contents Insurance, Travel Insurance and Pet Insurance. They also provide an online shopping service, where you can order products of the Internet and they will even deliver it to your door.
This is said to be J-Sainsbury's peripheral activities. In some J-Sainsbury's they have dry cleaning services and photos booths.
J-Sainsbury has many competitors so service must to outstanding to keep up. Supermarkets like Asda, Safeway, Tesco and Waitross are known as the competitors.
J-Sainsbury's services over 11 million customers a week. The people who are likely to shop at Sainsbury's are residents, people who live goes so they can drive there as there is a large area of free parking and other people can shop through there online shopping service. The online shopping service is a very good way of doing your shopping because in the world now people are so busy working they have no time to go and do there shopping so by using this service they can shop quick and it can be delivered to you're your door. Also it is useful for elderly or disabled customers.
The industrial sector that J-Sainsbury's operates in is the tertiary sector. This is because it is a retailer and retailing is one of the tertiary sectors.
Task 4
Location in a business
Every business locates where it thinks it will be successful. Businesses need:
> Staff to work there
> Raw materials to produce finished products
> Customers
> To keep their costs as low as possible.
> Transport
Then their reasons for choosing a particular location start to make sense.
Local Labour Supply
All Organisations need to be able to employee staff. So it makes sense to locate in an area where people live.
The factors, which influence a particular location, are often called local skills and the cost of labour.
Local Skills
In some parts of the country particular skills is a tradition. If you wanted to set up a business making pottery you would be sensible to locate in the midlands, around Stoke-on-Trent.
The cost of labour will always be more important to the business, which are labour intensive than those, which are capital intensive.
A labour intensive firm is one, which needs a high number of staff- such as call centres and J-Sainsbury's.
Capital-intensive business is one where machines or technology do most of the work.
Here the cost of labour is less important in the choice of location.
The Cost of Premises
The forces of demand and supply determine the cost of premises. The greater the demand for premises- and the fewer there are available- the higher the cost. For that reason, premises in the city centres- especially in London- are much more expensive than the cost of premises in the suburbs or in the regions.
Premises on major town centres shopping routes are always more expensive, than on secondary " side streets"- simply because most shoppers stay on the high street. J-Sainsbury mainly has stores in major towns. Also there are high employments with surplus of skilled labours.
Errol Anderson is situated at Elmgrove road, Harrow. Errol has chosen this location, because it is close to Harrow Wealdstone tube station, so customers can use the train if their car is in repair and they don't have another car.
The second reason why Errol Anderson motors is situated in Harrow because it is close to customers. People, who live in these houses that have car problems with their car, can visit Errol Anderson Motors to get their car repaired, as he is close to them. Also Harrow is a very busy area so there is definitely going to be work to do.
There are many J-Sainsbury's stores around the UK. 60% of stores are opened in town-centres or on the edge of centre locations. I think Sainsbury's mainly open their stores in town-centres because it is a busy and hundreds of people come to shop and being in the town-centre people may get attracted to pop in the store.
Sainsbury's, that are open on edges of locations, are normally in big shopping complexes like Brent cross, which attract families because of free parking.
Sainsbury's that are open on the centre of locations are normally more busy as the store I have chosen which is on the town-centre.
I have chosen to base my course work on the Sainsbury's, which is on Kenton road.
I think Sainsbury's have chosen to locate because it is very close to Kenton tube station. So for people who don't have a car to drive there
Can use the train. Also there is a bus stop right outside Sainsbury's so customers have a choice of using the bus or train.
It is on the side of a main road so everyone can see the building. There is also a big car park right in front of J-Sainsbury's so it is convenient for people who may wish to drive there. These are some factors, which attract customers.
You can see the map where you can see the store, the station and the roads.
Another reason why J-Sainsbury's may have chosen their location is because it is on a busy road where lots of people pass by and it is on the road of a residential area so this will boost the amount of people shopping in Sainsbury's.
Sainsbury's is the only big supermarket on Kenton road, so this means that prices of products will be cheaper than a little shop because the little shop will need to make every much profit they can so prices of products will be higher and J-Sainsbury's can make savings by buying in bulks from suppliers. This is called economics of scale.
The location of J-Sainsbury's was an appropriate one because there are plenty of customers, as there is a lot of family housing Kenton road is very busy and there is a train station near to.
There are plenty of customers for J-Sainsbury's. The customer/consumer buying habits is very high in this area because there are plenty of other shops for these people to shop at. This factor may have also influenced J-Sainsbury's location.
Errol Anderson picked a location just off the High street and very close to Harrow tube station. Many customers shop at the High street so Errol picked a location where there are plenty of customers. Again the customer/consumer buying habits are very high in this area, so this may have influenced Errol Anderson Motors location.
There are some common factors between J-Sainsbury's and Errol Anderson Motors; they both picked a location where there are as less competitors as possible. When there are fewer competitors, there is more chance that the customers will visit their business and of having a more profitable business.
They both picked a location where customers can visit their business quickly and efficiently; (they both picked their location very near a tube station).
Some factors are different. Sainsbury's picked a location where there are very few supermarkets and only some little shops which will not be a threat because of the prices they will be selling the products at, whereas for Errol, it doesn't really matter if his business is near a supermarket, as long it isn't near other motor repairing businesses.
Both J-Sainsbury's and Errol Anderson Motor are located either in or close to residential areas, which will provide both customers and suppliers for both businesses.
Transport
J-Sainsbury's need access to transport systems such as,
> Major motorways (M1, M25, M6)
> Airports
> Railway stations
> Buses
Railway stations are very important because employees and customers need a source of transport to get the J-Sainsbury's and Errol Anderson motors, so both businesses must consider opening near a railway station and also a bus stop. As we can see both businesses have opened near train stations and bus stops so employees and customer will have no problem getting to both businesses. By having these sources of transport near them it shows that great deal of care has been done in choosing the right location.
Both J-Sainsbury's and Errol Anderson motors have good sources of transport near them so I personally think more people will be attracted both customers and people who may an interest in working.
Customers need a source of transport, which suits them so I think both businesses have taken great consideration in choosing the right location.
Also employees and customers, who have cars, must also have access to roads and a safe car park, which must be planned by J-Sainsbury's before opening a branch.
In my case J-Sainsbury's in Kenton has a safe car park for employees and customers. There are car spaces close to the store entrance for disable and pregnant people and for employees there is a car park at the back and they can enter J-Sainsbury's thought the back door.
The transport system is also needed to transport goods. This is a critical factor for J-sainsbury's. Suppliers must have access to motorways in order for J-Sainsbury's to get their goods. J-Sainsbury in Kenton has many major motorways such as the M1, M20 and the M6 and there are many more where suppliers can get access.
Also fruits and vegetables are imported so airports are also important for suppliers to get access too. There are many airports, which J-Sainsbury's in Kenton, can get access to for example, Heathrow airport, Gatwick airport and Stanstard airport.
J-Sainsbury needs to think about labour costs. Wage levels are lower in some areas of the UK than in others. Labour costs are higher in urban areas, reflecting the higher costs of living in those areas.
J-Sainsbury in Kenton pays employees a wage level above the minimum national wags and have thousands of customers so J-Sainsbury's can afford to run the business smoothly with no financial problems. All employees are happy with the pay and bonuses, so the whole organisation will be very successful in achieving their aims and objectives of the store.
Transport networks for Errol Anderson motors are not that important compared to J-Sainsbury's.
Errol doesn't need to worry about how suppliers will get to him, because he doesn't deal with big suppliers, which come from far away. Errol Anderson motors can buy his parts from local car part shops at the trade price and be sold to the customer at the retail price. Errol Anderson motors can buy all his car parts from Euro car parts, which is located behind Wembley Stadium. Wembley stadium is not very far away from harrow at all, and so this is not a critical factor for Errol.
I am sure that Errol buys his car parts from Euro car parts because mostly car garages buy their car parts from there at a very low prices.
Also Errol Anderson motors doesn't employee a large work force, mainly because he doesn't need a large work force and Errol Anderson motors is not a very big business.
Errol Anderson doesn't need to worry about transport for his employees as the employees who work for him have a high chance of being local.
Talking about the graphs
If you look at graph A which is a graph of percentage employed by industry in the tertiary sector in 1993, you can see that the tertiary sector have employed 6% of people on other personal services and on graph B which is the same graph in 1998 the percentage has stayed the same to 6%. This shows that the demand of people in other personal services, which Errol Anderson motors, comes under, has the same.
Compared to J-Sainsbury's if you look at graph C you can see that the demand of staff for supermarkets has risen every year from 1994 to 1999.
If you look at graph D you can see and compare the three sectors and see that the tertiary sector has employed thousand's of people during the years. The secondary sector decreased with the number of staff employed during the years and now is slowly increasing year by year.
The primary sector has decreased by far because by 1989 there were 4.91 thousand people employed and in 1997 it dropped to 1.55 thousand.
Primary sector
There is a decline in the primary sector from the years 1989 to 1997. In 1989 there were 491,000 people employed in the primary sector and declined to 155,000 in 1997.
I think there are many reasons why this has happened. The main reason is that farms, coal mines, and oil refinery is all work which is far away from the local area. For example, if a man who was married with 3 children and had a house in Wembley, but had to go work for the rest of his life far away from his family and friends, working in a coal mine wouldn't be a life style a lot of people can adjust too. I think that's why the number of people interested in working in the primary sector is low.
Also there are other reasons like working conditions and wages, why the primary sector has declined. Someone working in a coal mine, would be working in a dirty and dusty environment which can cause injury to health also working far away from town-centres will mean the pay would be less and work would be hard. Also one important factor is coal is being imported because of price. Coal, which is imported, is cheaper then British coal which means coalmines in Britain cannot afford to hire more staff. So coal being imported is affecting the primary sector.
The amount the person would be earning working in a coal mine may not be enough to feed a family of three, so the primary sector could be said as not being very popular.
Secondary sector
Also there is a decline in the number of people employed in the secondary sector. In 1989 there were 273,000 people employed and declined too 225,500 in 1997.
Again there are many reasons why the number of people employed is declined during the years.
The main reason for the decline is the inability of British industry to compete with cheaper goods being manufactured abroad, because of its own high production costs and a slowness to recognise the new opportunities available. These are in areas such as electronics household goods and new types of food products.
Today production costs have fallen because of changes in working practices and lower wages costs. There has been a lot of foreign investment, which has assisted the secondary sector.
Also technology is taken over work of people. Technology these days are very modern and do work faster then a human, so instead of hiring people manufactures just work with machinery which saves them money and more is produced then humans.
Tertiary sector
The number of people employed in the tertiary sector has increased year by year. In 1989 there were 689,960 employed, and in 1997 there were 759,000 employed. As you can see the tertiary sector is steadily employing more and more people.
The main growth areas have been business and financial services, retailing and distribution and the communication industries.
Business and financial services include both banking and insurance.
This area grew quickly in the 1980's because of the increase in consumer spending and, at the time the rise in house rises.
Since 1990 employment in postal services and telecommunications, banking and finance, amongst estate agents and on railways has fallen. However major growth areas include the leisure industry and the public sector. Employment has increased in education as well as in medical and health services.
Stakeholder
Task5
Stakeholders are individuals and groups of people who have an interest at stake in the business. In the business sometimes their interests are the same.
Different businesses have different stakeholders.
There are many stakeholders in J-Sainsbury's. These are the local community; the local communities are the consumers for the supermarket.
J-Sainsbury needs a large workforce to work for them, so the local communities provide the labour supply for J-Sainsbury's.
If J-Sainsbury's was to move to another location or close down, the local community will be directly affected as the unemployment will rise up and trade will also suffer in the community because J-Sainsbury's rely on local trade, this means more of there sales will be made by the local community, and so the local community will go to supermarkets to do there shopping instead of small shops. I say this because the prices of products will be more expensive in small shops compared to J-Sainsbury's. This is because supermarkets like J-Sainsbury's buy there good in big bulks at a discounted rate, compared to small shops that may not have enough money to buy stock in big bulks.
The customers are stakeholders in J-Sainsbury's. I say this because without customers, J-Sainsbury's wouldn't even be able to run their business.
The customers can also affect the running of the business, because the customers have to be satisfied with the services that J-Sainsbury's provide, e.g. car parks, wide range of foods, quality of food and restaurants. If they are not happy they will shop elsewhere.
The employees are also stakeholders in the business. If they are doing their job correctly, the customers will be satisfied with J-Sainsbury's customer service. If they are not happy this will affect their work and the service the customers service. The employees would work at a poor standard, and if employees are very unhappy with their job they would also starts fight in the fight place, and not work as a team, which is very bad for a big company like J-Sainsbury's because this could give a bad image to the whole organisation.
Also employees who are not happy with the job can do strikes and take industrial action, which is time wasting and can damage J-Sainsbury's status.
If J-Sainsbury's were to shut down, all those employees will suffer by losing their jobs and they all will be unemployed.
The suppliers are major stakeholders in the running of J-Sainsbury's. The suppliers are also major stakeholders in the running of J-Sainsbury's. The suppliers supply the goods for J-Sainsbury's to sell to their customers. If J-Sainsbury's were to close down, the suppliers will lose their clients and will also lose profits, thus may end up bankrupt.
The shareholders are probably the most important stakeholders in J-Sainsbury's. Without the shareholders, J-Sainsbury's wouldn't be able to invest in their business and then it won't be able to compete with other supermarkets.
The local government is also a stakeholder with a direct influence. They can pass on new laws about how a business runs, and J-Sainsbury's and Errol Anderson Motors will have to adapt to these new laws. They can also pass on new health and safety laws.
Competitors are also stakeholder in the running of J-Sainsbury's. If one of J-Sainsbury's competitors opened a new supermarket near J-Sainsbury's, it will attract more customers to the area, but it could also potentially harm J-Sainsbury's business
The community is very interested in J-Sainsbury's, because either they do their shopping there or because the local community would want to know if the local roads are going to be congested, which will mean more pollution and noise in the area. The pollution and noise is mainly going to come from cars. The car fumes will pollute the air, which the community may be breathing this in. So the community is one of the most important stakeholders.
Compared to Errol Anderson motors, which is a much smaller business then J-Sainsbury's, but the community still have an interest in Errol Anderson motors, again because of road congestion's, pollution and noise of cars. Also it is highly likely that Errol's customers are from the community, so it is important for Errol Anderson motors to keep a good relation with the community.
Secondly the local community may be concerned about business activities and operations that could reduce the value of their properties.
So I think it would be very good if both J-Sainsbury's and Errol Anderson motors keep a good relationship with the local community.
Shareholders are people who invest money in a company. So the shareholders and people interested I J-Sainsbury's shares would be stakeholders of J-Sainsbury's.
A shareholder for J-Sainsbury's will mainly have two main interests.
> The first is that J-Sainsbury's do well and the value of the shareholders investment will increase.
> The second is that J-Sainsbury's will pay a good dividend twice a year.
A dividend is money, which J-Sainsbury's gives in return, just as a bonus for investing your money.
All shareholders of J-Sainsbury's are invited in an AGM, which is an annual general meeting. Al the meeting a shareholder has 1 vote for each share they have bought.
I personally think the most important stakeholder for J-sainsbury's is the shareholder. I say this because shareholders are known as the owners of J-sainsbury's and are run by the board of directors.
Shareholders also vote for who will be board of director at the AGM, which is held every year.
Shareholders also have an impact on J-Sainsbury if they were to sell all their shares; this would effect J-Sainsbury's directly as they would problems with fianace.
If I compare J-Sainsbury's, which is a public limited company to Errol Anderson motors, which is a sole trader, we know that Errol Anderson motors doesn't have shareholders as a stakeholder because Errol Anderson motors is a sole trader and the business is not suitable to run as a public limited company.
Employees have many interests in the business.
Employees who work for J-Sainsbury's and Errol Anderson motors have interests such as:
> The way staff are treated
> The rates of wage level
> And whether staff will feel secure at work
J-Sainsbury would want to keep their employees happy and satisfied because they deal with hundreds of staff, which must be treated equally.
The influences of employees vary from one business to another.
For example J-Sainsbury's is a recognised business, so J-Sainsbury's is likely to be more formal compared to Errol Anderson motors because Errol deals with only 2 or 3 employees.
Errol Anderson motors would be more informal and employees may call Errol from his first name compared to J-Sainsbury's where the manager may be called by his/her surname.
Errol Anderson motors:
In Errol Anderson motors, the main stakeholders are the customers. If there are no customers, Errol Anderson would have close down his business, if Errol Anderson closes down his business, customers will be forced to go to another garage.
Suppliers are also important stakeholders, because Errol Anderson depends on the suppliers to bring in supplies and spare parts for his garage.
The local community has an indirect influence on the business. If the local community does not bring enough trade to Errol's business, the business will close down and the local community will also suffer because it is losing its local trade.
Errol himself is a stakeholder in the business because he has an interest how the business runs and is directly responsible for any debts that the business incurs.
Although stakeholders all have an interest in the business sometimes they may disagree with a decision.
In J-sainsbury's, if one of the branches decided to close down, there may be conflicts between the stakeholders.
The stakeholders involved in this case will be the customers, the shareholders and the employees. The customers may oppose the fact that a J-Sainsbury's near them is closing down, because then they will have to visit another J-Sainsbury's supermarket.
Some employees may resent this. They may lose their job or they may not want to move to another J-Sainsbury's supermarket. The shareholders may be glad that this action is taking place because this particular branch may not be making enough profits. This is just one example of a conflict.
Another example is if J-Sainsbury's decided to start selling coats with animal fur, certain pressure groups may resent to the idea and start a campaign, this will cause conflicts between certain stakeholders. The head office may still want to sell the coats, some customers may like the coats, others may not and probably join a campaign, and these examples are conflicts between stakeholders.
Even a small business like Errol Anderson's may have arguments between the stakeholders.
For example, if Errol wanted to extend the time his garage is open, this may offer a better service for his customers, but this will put his assistants in a compromising position. They may not want to work the late hours, and this will cause conflicts between Errol and his assistants.
How do J-Sainsbury's respond to the stakeholders?
J-Sainsbury will respond to customers by giving customer a high standard of service. Also J-Sainsbury's will provide customers a wide range of quality food at low prices.
J-Sainsbury will respond to employees by giving them a good working package, good pay. Also employees will get training and a chance to make a career progression
J-Sainsbury will respond to suppliers by paying up all bills on time.
J-Sainsbury will respond to the community by giving lot of charities help
And also sell ethnic products to attract more ethnic customers.
Government as Stakeholders
The government has a very positive interest in all businesses- other wise it wouldn't be hardly be trying encourage them with initiatives such as regional aid.
Businesses create employment opportunities. They pay tax. People who are employed pay tax and don't claim benefits-, which means government gains revenue. British goods can be sold abroad which brings money into this country. People who are employed and earning a wage is more likely to save for their retirement- so are less of a burden on the state when they get older. They spend money, which helps the economy. They are generally happier and healthier people. If the economy is doing well and individuals feel prosperous, they are less likely to vote for a different political party at the nest general election.
I think these are all the reasons why the government takes an active interest in business.
The government has a big interest in J-Sainsbury's and Errol Anderson motors. This is because both businesses have to follow all rules and regulation, which the government sets.
However, the government is aware that without any regulation some undesirable business activities may take place. Smaller businesses like Errol Anderson motors would be at mercy of more powerful enterprises. Consumer rights may be ignored. People may be cheated on price. Employees may be treated unfairly. This is way legislation is needed to control the way J-Sainsbury's and Errol Anderson motors are run.
The government therefore has a significant influence on both the businesses- as it can make an activity unlawful and therefore effectively control business operations for J-Sainsbury's and Errol Anderson motors.
Also interest rates and taxes are controlled by the government which J-Sainsbury's and Errol Anderson motors must pay at the rate, which the government sets. This influences the business because if the government increase the rates of taxes, Errol Anderson Motors would be affected more then J-Sainsbury's as J-Sainsbury's is a bigger organisation and has more capital to pay of taxes and interest rates.
Trends
The tertiary sector is the most disparate of all the sectors.
Trends in retailing
Retailing is seriously affected by changes in consumer demand and this, in tern, is affected by two factors:
> The disposable income of consumers
> Consumer confidence about the future.
Disposable income is the amount of money you have left after paying tax, national income and essential bills.
Confidence in the future is important. If you have a temporary job, which will finish in a week, it wouldn't make sense spending all your money this week, no matter how much you are earning, if however you were in a permanent job with great prospects you would feel "safer" spending your money.
J-Sainsbury faces a lot of competition from other supermarkets like Tesco, Safeway and Asda, and the competition is increasing in the tertiary sector.
This can be said for Errol Anderson Motors too as He faces a lot of competition too from other garages like Euromasters and Kwik fit.
Competition is increasing in the Tertiary sector so this mean both businesses are constantly under pressure, for example during 1998 and early 1999 Marks and Spencers shocked everyone by announcing a serious fall in profits. However by the middle of 1999 sales were starting to improve, mainly because steady cuts in interest rates gave consumers more money to spend.
J-Sainsbury's and Errol Anderson motors have to look out for lot of factors, which can affect them. For example competition can lead both
J-Sainsbury's and Errol Anderson motors to losses. If both businesses start to sell products and provide services at higher prices which can bought cheaper else where with the same quality, the consumer will end up going to other supermarkets where they can buy there products and services at a cheaper price, which will mean the consumer will safe more money.
Also J-Sainsbury's must make sure they have a wide-range of products and keep on introducing new products. Also J-Sainsbury's must keep consumers aware of new products by advertising, in order for J-Sainsbury to sell new products because if the consumer doesn't know about new products they will end up not buying it.
Also Errol Anderson motors need to make consumers more aware of any new services they he provides otherwise again the consumer will not know about the new service.
Errol Anderson motors can make consumers more aware of new services by doing advertising in local newspapers. I say local newspapers because majorities of Errol's customer are going to be local.
How has J Sainsbury plc performed over the past five years in terms of growth, revenues and profits?
997/98
998/99*
999/00
2000/01
2001/02
SALES (incl. taxes) 52 weeks £m
5,496
6,378
7,414
8,441
8,206
Group profit before tax,
amortisation of goodwill,
exceptional costs, and
non-operating items
728
755
580
549
627
% Change
1.8
3.7
(23.3)
(5.3%)
4.2%
* The 1999 Statutory Accounts covered the 56 weeks to 3 April 1999. To facilitate comparisons, the above summary sets out the audited figures for the 52 weeks to 1 April 2000 alongside the 52 weeks to 3 April 1999 (unedited).
External influences
There is much external influence, which affect both J-sainsbury's and Errol.
Some external influences are:
> Competition
> Legal
> Environmental
> Public
> European union
Competition affects all different types of businesses.
J-Sainsbury's is affected by many competitors due to the increase of retail outlets in the tertiary sector.
Also Errol is affected in the same way.
J-Sainsbury's and Errol describe competitors as competing for the same customers.
J-Sainsbury spends a lot of money investing in research and development to be "one step ahead" of their competitors such Tesco, Safeway and Asda.
Also J-Sainsbury's are very keen on advertising and promotions to make sure customers are aware of the products and services.
J-Sainsbury also does product endorsement, for example J-Sainsbury's used Jamie Oliver to introduce some food products like salads. J-Sainsbury's boosted there sales very high because of product endorsement.
Errol Anderson motors on other hand is simpler and doesn't have that much capital to spend on advertising. Errol Anderson motors can advertise in local newspapers to make more people aware of the services he provides.
Legal Requirements
J-Sainsbury's and Errol Anderson motors both must comply with the law of the land. In addition, they have to take serious note of their social obligations- to the environment, the community, and the general public and to customers. If they don't this could bring the attention of media and seriously damage the image of J-Sainsbury's and Errol Anderson motors.
The government has a major responsibility to stop or prevent undesirable behaviour in society. For this reason J-Sainsbury's and Errol Anderson Motors are restricted by many laws and regulations, which constrain the way in which they operate.
Health and Safety Legislation
The most important act relating to health safety is the health and safety at work act 1974.
This places a legal responsibility on J-Sainsbury's and Errol Anderson motors and their employees in relation to health and safety issues. It has been designed to protect employees and the public from unsafe or dangerous work practices.
The health and safety act states that J-Sainsbury's and Errol Anderson motors must provide the following to their employees,
> A safe working environment and adequate welfare facilities
> Information on health and safety
> Safe entry and exit routes
These are just some things that J-sainsbury's and Errol Anderson motors must provide to their employees
Also the health and safety act states that employees must,
> Take responsible care of their own health and safety
> Take responsible care for the health and safety of other people who may be affected by their actions
Again these are just some of the duties of employees who work for J-Sainsbury's and Errol Anderson Motors.
If there are more then five employees, which work for a business the employer must prepare a written document, which states company policy on health and safety, and circulate this to all employees. This may not relate to Errol Anderson motors as he doesn't have more then five employees that work for him because his business is small, compared to J-Sainsbury's as J-Sainsbury's would definitely need more then five employees to run the store.
Consumer protection legislation
This has been designed to safeguard customers from being sold shoddy good, being misled over details of products or price
The government makes all these laws and J-Sainsbury's and Errol Anderson motors have no control over, expect to follow and obey these laws or both businesses will be committing a crime, which is illegal.
Environment influences
The environment is a big external influence to J-Sainsbury's and Errol Anderson motors.
Some people who shops at J-Sainsbury's are very concerned with what they are eating, for example, organic foods and modified ingredients.
People may have heard from media that it is very good to eat organic foods and not eating other products, which will mean J-Sainsbury's will make, looses on other products, which are not organic. This is just an example there are many more incidents like this, which can affect both businesses.
J-Sainsbury's and Errol Anderson motors have no control over what people buy from them.
Errol Anderson Motors is also affected by environmental influence because people are worried about pollution from car fumes.
More and more people are buying unleaded engine cars because unleaded petrol is cheaper and doesn't cause pollution. This can easily change for example if tomorrow a new petrol was introduced and everyone started buying cars which took that new petrol Errol Anderson would be affected because he may not have the knowledge to fix that particular car which will mean he will loss money.
There also other external influences which affect both J-Sainsbury's and Errol Anderson motors.
They are factors like the interest rates, taxes and the European union.
The interest rates are in the hands of the government and not in the hands of any business.
The government can decide whether to increase or decrease interest rates.
If the government decide to increase interest rates, this will have a big impact on J-Sainsbury's and Errol Anderson motors.
I say this because costs of the business will go up. I think this will have more affect on Errol Anderson motors. I think this because Errol Anderson motors is a sole trader and is a small business. If Errol doesn't get enough customers, he will be losing money, which may result in him closing down.
Also J-Sainsbury's would be affected because shareholders may sell their shares and people would not be interested in J-Sainsbury's shares, this is because if the government put interest rates up J-Sainsbury's would be making less profit and it would be very hard for J-Sainsbury's financially.
Another external influence would be income tax. If the government decided to raise income tax, this would mean people would be spending less money, as they will get less income. If income tax were to go up then this would affect both J-Sainsbury's and Errol Anderson Motors.
It would affect both businesses financially. If people started spending less money this will result in both J-Sainsbury's and Errol Anderson motors making a lower profit turnover.
Also cooperation tax is a very important external influence. Cooperation tax is tax, which J-Sainsbury's and Errol Anderson motors have to pay because they are both businesses.
If cooperation tax were to go up this would have a big affect on J-Sainsbury's and Errol Anderson motors.
It would cost the business a lot of money, which will mean J-Sainsbury's and Errol Anderson motors will be making less profit, which may result to prices of products and services going up.
If prices of goods and services were to go up this would cause a lot of competition in the tertiary sector, which is not good for J-Sainsbury's or Errol Anderson motors.
As this is an external influence, and businesses have no control over this, businesses can only obey what the government sets.
European union
As England is in the European union, businesses like J-Sainsbury's have been affected.
When J-Sainsbury's buy wines and beers they would usually have to pay a duty tax. But as England is in a European union trading wines and beers from other European countries will duty free
This is good for J-Sainsbury's because this will lead to making more profit, which is good for J-Sainsbury's shareholders and if J-Sainsbury's make a lot of profit people will be attracted to buy more shares of the company.
This will also make J-Sainsbury's financially healthy.
Also as England is in a European union, business will have to follow laws, which the European union set.
One law I know about is European union members are only allowed to work only a maximum of 40 hours a week.
There is also another law about minimum wage. All businesses have to pay employees the minimum wag, which is £4.20 an hour at the moment.
Laws, which are set by the European union, must be followed by businesses like J-Sainsbury's and Errol Anderson motors, as they are in a European union.
Summary and comparisons of J-Sainsbury's and Errol Anderson Motors
This section will conclude all my findings and understandings of how businesses develop.
There are many external influences which affect how a business runs. These external influences can interact with each other and affect a business.
The success of each business depends on many factors. For example, the location of each business, a supermarket for example, must be close to its customers, i.e. outside a bus stop or near a school or community, not in the middle of anywhere. A delivery service does not necessarily have to be near their customers, because they deliver the goods to their customers.
Errol Anderson is a successful sole trader because he finishes his tasks on time, the customers are proud of his hard work. His business is located near the Harrow tube station and is situated on the high street.
The influence of stakeholder groups is an important factor.
The stakeholders are greatly affected if anything drastic were to happen to the business.
In J-Sainsbury's, the shareholders are major stakeholders, if the sales are dropping, the share's value would drop and the shareholders would lose money.
The local community will be directly affected if J-sainsbury's were to move or shut down because unemployment would rise and trade will suffer.
Errol Anderson's suppliers are stakeholders, if Errol was to move or shut down, the suppliers will lose a major customer.
I think that the most important factors are the location of each business and the influence of stakeholder groups.
These factors have the most effect on how J-Sainsbury's and Errol Anderson Motors run.
When comparing J-Sainsbury's and Errol Anderson Motors, I find that there are many similarities and differences between them.
Some of these relate to the external influences. The similarities are that both J-Sainsbury's and Errol Anderson Motors sell their services to the public. They both operate under the Private sector. Both businesses intend to make a profit, and they both have suppliers. Without suppliers, the businesses would have no products or services to sell to the public.
If Errol Anderson had no suppliers, he would not be able to obtain spare car parts to repair the customers' car.
The customer won't be able to get his car repaired and visit another garage.
Both Errol Anderson motors and J-Sainsbury's have picked a location close to their customers, they both are very close to a tube station and customers can reach to them without a problem.
Some of the differences are listed in the table below.
J-Sainsbury's is a public limited company whose shares are sold through the stock exchange, compared to Errol Anderson motors, who is a sole trader and has unlimited liability.
J-Sainsbury has limited liability and as a whole organisation would be more formal dealing with employees, customers and suppliers. The dress code for employees would also be formal, as staffs that work for J-sainsbury's have to wear uniform.
Errol Anderson motors would be informal as it is not a large organisation and deals with much less customers then J-Sainsbury's. Also their dress codes will de informal too because of the duties an employee has to do working for a motor garage.
Another difference is that J-Sainsbury has to do a lot of advertising in order to make customers more aware of new products. And also have to do product endorsement for example they did it with Jamie Oliver.
Also J-Sainsbury is a part branch compared to Errol Anderson motors where there is only one garage.
J-Sainsbury has a large work force to work for them because they business are very big, but in Errol's case he doesn't need a big work force because they business is smaller.
The shareholders are the owners of J-Sainsbury's where Errol owns his business. Errol is responsible for any loss the business makes.
I have picked specific similarities and differences that have interested me. The similarities and differences have both occurred because both
J-Sainsbury's and Errol Anderson motors are very different businesses, although they operate differently, they sometimes have similar targets and aims in a business.
They both intend to make a profit; they both want to attract as many customers as possible, they both need suppliers, they both aim to make the customers happy with their services.
BY
JAYMIT PATEL